A new economic governance framework fit for the future
On 10 February 2024, the European Parliament and the Council reached agreement on the most ambitious and comprehensive reform of the EU's economic governance framework since the aftermath of the economic and financial crisis. The Commission had presented its reform proposals in April 2023.
The main objectives of the framework are to strengthen Member States' debt sustainability, and promote sustainable and inclusive growth in all Member States through growth-enhancing reforms and priority investments. The framework will help make the EU more competitive and better prepared for future challenges by supporting progress towards a green, digital, inclusive and resilient economy.
Stronger national ownership with medium-term plans
New medium-term fiscal structural plans are at the centre of the new framework. Member States will design and present plans setting out their fiscal targets, priority reforms and investments, and measures to address any possible macroeconomic imbalances during a fiscal adjustment period. The ‘adjustment period' refers to the timeframe within which, through a combination of fiscal adjustments, reforms and investments, a Member State's debt level is put on a sustainable downward path.
Simpler rules taking account of different fiscal challenges
The new framework introduces risk-based surveillance which differentiates between Member States based on their individual fiscal situations. This approach will adhere to a transparent common EU framework underpinned by safeguards to ensure that debt is put on a downward path (the debt sustainability safeguard) or provide a safety margin below the Treaty deficit reference value of 3% of GDP in order to create fiscal buffers (the deficit resilience safeguard).
Promoting reforms and investment
Both reforms and investment are needed to face new and existing challenges. They are also essential components of credible debt-reduction plans. The new framework will facilitate and encourage Member States to implement the measures needed to secure the green and digital transitions, strengthen economic and social resilience and bolster Europe's security capacity.
Rules require enforcement. While the new framework provides Member States with more leeway over the design of their plans, it also establishes a strengthened enforcement regime to ensure Member States deliver on their commitments. Member States will present annual progress reports focusing on the implementation of commitments laid out in their plans for assessment by the Commission.
- Proposal for a regulation